Google CEO Eric Schmidt fears that too much information is shared online, and predicts that people will one day change their name and reinvent themselves in order to escape their digital past.

That point of view might be extreme, but it is true that social networking has forced us to more closely examine and redefine the concepts of privacy and identity.

There are many exciting benefits to the evolution of the Web and the rise of social networking. Facebook and Twitter have enabled people to reconnect with friends and family, and provide a platform for sharing information and staying in touch. The real-time aspect of social network status updates has also transformed online search and breaking news.

The problem is that social networking also provides a very powerful tool for embarrassing yourself or ruining your reputation on a global and virtually eternal scale. Once you put it online, it is shared around the world in seconds, and can still be recalled after decades.

You’re hired

It is not uncommon now for the job application process to include sharing your social networking account information. Tech savvy employers want to be able to check out your Facebook profile and your tweet history on Twitter.

What you say and how you act online says a lot about you. Examining your online persona gives employers a raw and unfiltered glimpse at who you really are, and is a much more effective tool for screening potential employees than the psychological personality or aptitude tests relied on in years gone by.

You’re fired

There is a long and growing list of stories of people losing their job as a result of Facebook status updates or Twitter tweets. It is generally a bad idea to bad mouth your boss or your job on a social networking site, or to post pics and status updates about how much fun you’re having at the beach after you called in sick.

One poor soul learned this lesson the hard way — possibly costing him a job at Cisco before he even started. Employers are watching, so letting the world know that you hate the job you have been offered is a quick way to get that offer rescinded.

What’s your (friend’s) credit score?

It’s all about who you know. In this case, who you know could make or break whether or not you can get a loan. Some banks are using services like Rapleaf to scan your social network and identify contacts connected with you that also do business with the financial institution. Based on the financial stability and credit history of your social network connections, the bank can make an assumption about what sort of credit risk you might be.

Till death do us part

It seems fair to assume that your spouse would be a Facebook friend, and a part of your Twitterverse. Why not? Love is grand, and you want to share everything with your partner … until you don’t. If the relationship goes south, you may want to unfriend your ex and be careful what you say online.

A Time Magazine article explains “Lawyers, however, love these sites, which can be evidentiary gold mines. Did your husband’s new girlfriend Twitter about getting a piece of jewelry? The court might regard that as marital assets being disbursed to a third party. Did your wife tell the court she’s incapable of getting a job? Then your lawyer should ask why she’s pursuing job interviews through LinkedIn.”

Well, the Internet never forgets and it has zettabytes of archived storage capacity that can be searched in seconds thanks to companies like Google. I don’t recommend changing your identity to try and dodge your digital past, but I do recommend exercising a modicum of discretion and common sense regarding what you post online.